(Source: PRNewswire-FirstCall)
PHILADELPHIA, July 21 /PRNewswire-FirstCall/ -- Sunoco Logistics Partners L.P. (the "Partnership") today announced net income for the second quarter ended June 30, 2009 of $66.6 million, or $1.74 per limited partner unit on a diluted basis, compared with $51.3 million, or $1.47 per limited partner unit on a diluted basis, for the second quarter ended June 30, 2008. Operating income for the second quarter ended June 30, 2009 increased by $18.9 million, or 31.9 percent, from the prior year's second quarter. The improvement was driven by higher lease acquisition results, increased crude oil pipeline and storage revenues and the November 2008 acquisition of the MagTex refined products pipeline and terminals system. The increase in operating income was partially offset by a $3.6 million increase in interest expense associated with higher borrowings for asset acquisitions and organic growth opportunities. Distributable cash flow for the quarter increased 24.8 percent to $71.8 million compared to the second quarter of 2008.
For the six months ended June 30, 2009, net income increased to $147.5 million compared to $88.8 million for the first six months of 2008. Operating income for the first half of 2009 increased $64.2 million, or 61.4 percent, when compared to the prior year period. The increase was the result of significant improvements in the lease acquisition business, contribution from the MagTex acquisition and increased crude oil pipeline and storage revenues. Increased interest expense partially offset the increase in operating income, leading to an improvement of $58.7 million to net income. Distributable cash flow for the first half of 2009 increased 49.5 percent to $161.6 million compared to the prior year period.
Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P., declared a cash distribution for the second quarter of 2009 of $1.04 per common partnership unit ($4.16 annualized), which is an 11.2 percent increase over the second quarter of 2008 and a 2.5 percent increase over the prior quarter. The distribution is payable August 14, 2009 to unit holders of record on August 7, 2009. It is the twenty-fourth distribution increase in the past twenty-five quarters.
"Our strong second quarter performance is a combination of stable cash flows in our base business along with crude oil market opportunities resulting from a contango market structure," said Deborah M. Fretz, President and Chief Executive Officer. "We utilized our crude oil marketing expertise in conjunction with our crude oil pipeline network and the Nederland Terminal to take advantage of the contango market."
"Additionally, we continue to see forward growth in the base business. Last year's acquisition of the Texas MagTex refined products system as well as the investment in new tankage at Nederland are contributing to growth in cash flow. Despite continued pressure on refiner margins, and the weak economy, our geographic and business diversification has served us well. We continue to invest in organic growth opportunities like the ongoing Nederland capacity expansion, marketing terminal optimization, the 2009 completion of a pipeline from Nederland to Port Arthur and extensions of the MagTex pipeline system. All of these projects will contribute to future cash flow growth. Our conservative balance sheet and access to liquidity have us well positioned to further expand our business platform."
Segmented Second Quarter Results Refined Products Pipeline System
Operating income for the Refined Products Pipeline System increased $2.0 million to $10.6 million for the second quarter ended June 30, 2009 compared to the prior year's second quarter. Sales and other operating revenue increased by $7.6 million to $31.2 million due primarily to results from the Partnership's acquisition of the MagTex refined products pipeline and terminals system in November 2008 and increased pipeline fees. Operating expenses increased $4.5 million to $15.3 million for the second quarter 2009 due primarily to the MagTex acquisition and a reduction in refined product operating gains. Depreciation and amortization expense increased for the three months ended June 30, 2009 primarily due to the MagTex acquisition.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $3.3 million to $21.2 million for the second quarter ended June 30, 2009 compared to the prior year's second quarter. Sales and other operating revenue increased by $7.6 million to $46.9 million due primarily to increased throughput, higher fees and additional tankage Nederland terminal facility, as well as results from the MagTex acquisition. Other income increased $0.6 million from the prior year's second quarter as a result of an insurance recovery associated with the Partnership's refinery terminals. Cost of goods sold and operating expenses increased by $3.7 million to $17.6 million for the second quarter of 2009 due primarily to the MagTex acquisition and lower operating gains. Depreciation and amortization expense increased to $4.6 million for the second quarter of 2009 due to the MagTex acquisition and increased tankage at the Nederland facility. Selling, general and administrative expenses increased to $4.9 million compared to $4.2 million in the prior year period due to increased employee costs, along with an insurance recovery recorded in the second quarter of 2008.
Crude Oil Pipeline System
Operating income for the Crude Oil Pipeline system increased $13.7 million to $46.6 million for the second quarter of 2009 compared to the prior year's second quarter due primarily to significantly higher lease acquisition results and optimization of crude oil storage capabilities as the crude oil markets remained in contango during the second quarter of 2009. Increased pipeline fees associated with resolution of a $6.8 million prior year tariff adjustment also contributed to the improved operating performance. Other income decreased $1.6 million compared to the prior year's quarter due primarily to decreased equity income associated with the Partnership's joint venture interests and an insurance gain recognized during the second quarter of 2008. Selling, general and administrative expenses increased to $5.8 million compared to $5.0 million in the prior year period due to increased general employee costs.
Lower crude oil prices were a key driver of the overall decrease in total revenue, cost of products sold and operating expenses from the prior year's quarter. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma decreased to $59.61 per barrel for the second quarter of 2009 from $124.00 per barrel for the second quarter of 2008.
Segmented Six Month Results Refined Products Pipeline System
Operating income for the Refined Products Pipeline System increased $5.9 million to $21.2 million for the six months ended June 30, 2009 compared to the prior year period. Sales and other operating revenue increased by $14.7 million to $62.6 million due primarily to results from the MagTex acquisition described above, along with increased pipeline fees. Other income increased $1.1 million compared to the prior year period as a result of an increase in equity income associated with the Partnership's joint venture interests. Operating expenses increased by $6.8 million to $29.3 million due primarily to the MagTex acquisition and a reduction in refined products operating gains. Depreciation and amortization expense increased $2.0 million during the first half of 2009 due primarily to the MagTex acquisition. Selling, general and administrative expenses increased to $11.1 million compared to $9.9 million in the prior year period due to increased incentive compensation expense and general employee costs.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $13.3 million to $42.4 million for the six months ended June 30, 2009 compared to the prior year period. Sales and other operating revenue increased by $14.5 million to $93.2 million due primarily to the increased throughput, higher fees and additional tankage at the Nederland terminal facility, along with the MagTex acquisition. Other income increased $0.6 million from the first six months of 2009 as a result of the insurance recovery discussed above. Cost of goods sold and operating expenses increased by $5.1 million to $32.7 million for the period ended June 30, 2009 due primarily to the MagTex acquisition. Depreciation and amortization expense increased to $9.3 million for the first half of 2009 due to the MagTex acquisition and increased tankage at the Nederland facility. During 2008, a $5.7 million non-cash impairment charge was recognized related to the Partnership's decision to discontinue efforts to expand LPG storage capacity at its Inkster, Michigan facility. Selling, general and administrative expenses increased $1.0 million to $10.1 million during the first half of 2009 due to increased incentive compensation expense, general employee costs and an insurance recovery recorded in second quarter of 2008.
Crude Oil Pipeline System
Operating income for the Crude Oil Pipeline system increased $45.0 million to $105.2 million for the first six months of 2009 compared to the prior year period due primarily to significantly higher lease acquisition results and increased pipeline fees described above. Other income decreased $2.7 million compared to the prior year's quarter due primarily to decreased equity income associated with the Partnership's joint venture interests and an insurance gain recognized during the second quarter of 2008.
